Annuity distribution phase is the period during which an annuity begins paying out income or systematic withdrawals to the owner or annuitant, following the accumulation or deferral phase. In a traditional sense, the distribution phase begins at annuitization, when the contract is irrevocably converted into a stream of payments based on life expectancy or a fixed period. In modern practice, many contracts enter a distribution phase when lifetime income riders are activated or when owners take regular withdrawals for retirement income. Tax rules, particularly for qualified accounts, influence the timing and structure of distributions through required minimum distribution regimes and post-SECURE Act beneficiary rules.

Advisors plan for the annuity distribution phase when mapping out retirement income strategies, deciding when and how to turn accumulation values into cash flow. They evaluate tradeoffs between irrevocable annuitization and more flexible withdrawal-based approaches, balancing guarantees with liquidity and legacy goals. Advisors also coordinate distribution phase decisions with Social Security claiming strategies, pension elections, and portfolio withdrawals to manage tax brackets and sequence-of-returns risk. During reviews, they monitor withdrawal rates against contract provisions to avoid depleting value prematurely or triggering excess-withdrawal penalties on income riders. Understanding the annuity distribution phase helps advisors convert static account values into sustainable income plans tailored to each clientTMs retirement path.